Record October Shortfall Opens New Fiscal Year
The U.S. government posted a $404.1 billion budget deficit in October 2026, the opening month of fiscal year 2027, according to the Monthly Treasury Statement. That gap widened by $120 billion, or 42 percent, compared with October 2025's $284.3 billion shortfall. Total October outlays climbed 12 percent to $773.0 billion while federal receipts fell 9 percent to $368.9 billion. Calendar timing shifts accounted for part of the jump because November 1 fell on a weekend, pulling some benefit disbursements into October. Even after adjusting for those timing shifts, the Treasury estimated the October deficit at $285 billion, up $94 billion or 49 percent from a year earlier.
Treasury Fiscal Data showed individual income tax collections dropped to $186.4 billion in October from $217.0 billion a year earlier. Individual income taxes accounted for 50.5% of total federal revenue in October, while Social Security and Medicare taxes made up 36%. Net customs duties declined to $19.2 billion from $31.4 billion as customs refunds jumped to $6.7 billion from $1.7 billion. Gross customs collections totaled $26.0 billion in October, down from $33.1 billion during October 2025's tariff revenue peak.
Rising borrowing costs and military disbursements propelled October spending to a monthly record. Net interest on the public debt climbed 13.4 percent year on year to $103.1 billion, up from $90.9 billion a year earlier, while gross interest costs hit $115 billion. Defense outlays jumped 29 percent to $128.9 billion in October, reflecting delayed military trust-fund payments from the prior year's government shutdown alongside higher procurement spending.
